You sell your home for $175,000. You owe $150,000 on your mortgage. So when you leave the closing table, you get a check for $25,000, right? Not quite.
Sellers are responsible for a variety of fees associated with a real estate transaction.
- Seller closing costs includes Realtor’s commission, escrow/attorney fees, transaction and/or processing fees charged by the real estate agency or closing agency.
- Seller paid closing costs is the portion of the buyer’s closing cost that you may agree to pay during the negotiation of the contract.
- Title insurance is what’s known as clearing title. There are general two policies; one for the lender and one for the owner.
- Annual property taxes are prorated to the actual date of closing.
- A home warranty may be required if you agreed to purchase during the negotiation of the contract.
- Other miscellaneous charges such as filing fees, document preparation fees, transfer fees, etc.
All of these charges normally equate to 6-10% of the sales price so it is important to factor in closing costs when selling your home. You should not have to physically produce funds to cover these costs as it is deducted from your profit. However, there are instances when there is not enough equity in the home to cover all charges.
Although this list may feel overwhelming, you should also find comfort in knowing that the buyer’s cost list is much longer and several things on this list are negotiable.
Click here for more information on seller closing costs.